LG Display Has Smaller Loss Than Estimated on Mobile Devices
Stock Chart for LG Display Co Ltd (034220)
LG Display Co., the world’s second- largest maker of liquid-crystal displays, posted a loss that’s smaller than analysts estimated on demand for panels for smartphones and tablet computers.
The company had a net loss of 115.4 billion won ($106 million) in the three months ended in March, LG Display said in a statement today. That compared with an average estimate for a loss of 208.4 billion won in a Bloomberg survey of 12 analysts. Sales fell 8.7 percent to 5.37 trillion won.
LG may post a profit in the second quarter, helped by demand for displays in mobile devices and 3-D TVs, said the company, which makes screens for Apple Inc.’s iPad. Prices for displays used in tablet computers and laptops will likely maintain an “upward momentum,” Seoul-based LG said.
“Their guidance for the second quarter is aggressive,” said Song Seong Yeob, a fund manager at Seoul-based KB Asset Management Co., which manages $21 billion in assets. “Given the numbers were better than the market consensus, the shares should be able outperform other technology stocks.”
LG Display shares fell 0.6 percent to 36,100 won at the 3 p.m. close of trading in Seoul before today’s announcement.
The operating loss, or sales minus the cost of goods sold and administrative costs, was 239.2 billion won, reversing from an operating profit of 789.4 billion won a year ago.
The average price of LG’s panels fell about 17 percent in the first quarter amid slowing TV sales, the company said.
Recovery in spending on LCD TVs has been “particularly slow,” as the latest models equipped with 3-D functionality and Web-based services failed to generate fresh demand, said James Song, an analyst at Daewoo Securities Co. in a March 15 report.
The average price for flat-screen TVs in the U.S. fell for a third straight month in February as makers tried to clear inventory before rolling out new models, according to research company IHS ISuppli.
Sales at LG this quarter will be driven by demand for tablets, said Hwang Joon Ho, an analyst at Daewoo in Seoul.
“The iPad is the most popular among information-technology products, and sales of IT panels will increase a lot from April,” he said before today’s announcement.
Panels for TVs accounted for less than half the overall sales in the first quarter, compared with 54 percent a year ago, according to LG. Demand for 3-D TVs will also help boost profit, Chief Financial Officer James Jeong said today. LG aims to capture 50 percent to 70 percent of 3-D TVs sold globally this year, he said.
LG is promoting a technology called Film Patterned Retarder, or FPR, which uses polarized glasses to view 3-D images with visual information sent to both eyes simultaneously.
It offers an alternative to the shuttered-glasses approach used by Samsung Electronics Co., which produces a 3-D image by sending visual information to each eye sequentially. LG said its polarized glasses will be lighter and more comfortable to wear, with less eye strain, than shuttered glasses.
LG expects sales of displays using the technology to account for about half of its overall shipments of TV panels in the second half, Jeong said.
Production disruptions in Japan after the March 11 earthquake may tighten supply and help slow falls in panel prices, Daewoo’s Hwang said.
Sharp Corp., Japan’s largest maker of LCDs, plans to suspend its two biggest display factories until May after last month’s natural disaster led to a shortage of materials, Miyuki Nakayama, a Tokyo-based spokeswoman, said on April 11.
The disaster has had “very limited” impact on LG’s production so far, Jeong said.
“A favorable environment is being created” for LG, Hwang said.
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